Gain Derived from Sale of Property Which Is Not a Capital Asset Not Subject to Final Capital Gains Tax

February 27, 1984 BIR RULING NO. 045-84 34-h-202-83-044-84 S i r : This refers to your letter dated February 8, 1984 requesting exemption from the payment of the capital gains tax imposed by Section 34(h) of the Tax Code as amended by Batas Pambansa Blg. 37 relative to the expropriation of your commercial lots covered by Transfer Certificate of Title Nos. 263727 and 263728 of the Register of Deeds of Quezon City. It is represented that you are a real estate dealer being the owner of the two adjacent commercial lots with a nine door apartment erected thereon, located at G. Araneta Avenue Extension, Santol, Quezon City, consisting of a total area of Six hundred twenty four (624) square meters, more or less; and that you will be paid the amount of P374,400.00 by the Ministry of Public Highways as stipulated in the Deed of Absolute Sale dated November 23, 1983 upon transfer of title to the government. In reply, I have the honor to inform you that since your property is not a capital asset, the gain derived by you from the sale thereof is not subject to the final capital gains tax prescribed by Section 34(h) of the Tax Code, as amended by Batas Pambansa Blg. 37 but to the ordinary income tax rates prescribed by Section 21(b) of the Tax Code, as amended by B.P. Blg. 135. adc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner